Rendell’s arena plan hinges on Pens, casinos

By Andrew Conte
TRIBUNE-REVIEW
Friday, March 31, 2006

Pittsburgh can get a new arena, Gov. Ed Rendell said Thursday — on three conditions.

The Penguins must agree to stay and help to pay, and the city’s casino operator must pay the largest portion.

It’s not clear any of that will happen.

Penguins officials said they need “a few weeks” to examine the governor’s “Pittsburgh Arena Now” plan, and they won’t rule out shopping the team to other cities after June.

The team still favors its partnership with Isle of Capri Casinos, which would pay $290 million for a new arena if it wins the license for a slots parlor in Pittsburgh.

“Any time you have serious, multiple plans in front of you, that’s encouraging,” said team President Ken Sawyer. “But I have to make sure this plan truly is as advertised.”

The other two casino bidders didn’t endorse Rendell’s plan either.

Forest City Enterprises, which would own Harrah’s Station Square Casino, said it wants Penguins officials first to decide whether they will stay in Pittsburgh.

“We need to know if the Penguins are participating or not,” said spokesman Abe Naparstek. “The Penguins need to put money into this plan. It’s a plan for the Penguins. They need to take the first step and make a commitment to the city.”

Don Barden, the Detroit businessman behind Majestic Star Casino’s North Shore plan, said he wants a ruling from the state Gaming Control Board about whether it’s legal to give money for an arena.

“I said I may consider something once I see all the facts,” Barden said.

Those responses fall short of expectations set by Rendell, Mayor Bob O’Connor and Allegheny County Chief Executive Dan Onorato when they presented an alternate arena proposal yesterday.

Getting Forest City and Barden to agree to the deal in writing will be critical, Rendell said.

“If they say, ‘No,’ the plan falls apart,” Rendell said.

Under the plan, the city-county Sports & Exhibition Authority would float bonds worth $293.5 million to cover the arena’s $290 million price tag and other costs.

The Penguins would pay $8.5 million up front, kick in $2.9 million a year and forgo $1.16 million from annual naming rights.

The team, a tenant at Mellon Arena, stands to make millions more with a new arena by running the facility, including concessions.

“They ought to be willing to jump through hoops to get that deal,” said Jake Haulk, president of the Allegheny Institute for Public Policy, a think tank based in Castle Shannon.

If Forest City or Barden win the casino license, they would have to pay $7.5 million a year toward the arena debt.

The final piece would come from the state’s tax on casino gambling.

Under the gambling law, the state gets 5 percent of casino revenues for a statewide development fund. The fund is expected to raise between $150 million and $170 million annually, of which $7 million a year would pay debt on the arena.

The money isn’t set aside for any other use, and it would not lessen the amount of money designated for a proposed convention center hotel or debt service at Pittsburgh International Airport.

State taxpayers would guarantee the bonds by agreeing to pay them off if the slots money dries up, Rendell said.

Sen. Jane Orie, R-McCandless, criticized the governor’s proposal for relying on borrowed money.

“There is a plan on the table for a new arena for the Penguins, financed completely by the private sector, using gambling revenue,” Orie said in a statement. “Unfortunately, it appears that politicians in Harrisburg would rather jeopardize this plan and place the Commonwealth’s taxpayers at risk.”

Rendell’s Republican challenger in the November general election, Lynn Swann, called the governor’s proposal a “loser” for taxpayers. Swann endorsed the Penguins’ partnership with Isle of Capri on Wednesday.

“Rendell’s plan includes not one cent for Hill District redevelopment, (and) it would force the Penguins further into debt and cost the taxpayers $210 million,” Swann said in a statement. “Plan B is a lose, lose, lose for Pittsburgh.”

State Rep. Paul Costa, D-Wilkins, who also has endorsed Isle of Capri, said he’s glad Rendell is willing to work with the Penguins, but questioned what would be lost by steering slots money to an arena.

“I’m concerned about that because, where was the money going to go initially?” Costa said.

Penguins officials have said they cannot talk with elected officials about alternate plans for an arena, but O’Connor said they met with him privately Tuesday to discuss sites for an arena.

The Sports & Exhibition Authority is examining sites, including the Mellon Arena parking lots and land between Fifth and Centre avenues in Uptown, Onorato said.

Andrew Conte can be reached at aconte@tribweb.com or (412) 765-2312.

This article appeared in the Pittsburgh Tribune Review © Pittsburgh Tribune Review